Real Money

March Toward Long-Term Profitability Continues As First Horizon Enters 150th Year

MEMPHIS, Tenn., Jan. 17, 2014 (GLOBE NEWSWIRE) -- In 2013 First Horizon National Corp. (NYSE:FHN) continued making progress toward long-term profitability in its regional banking business through First Tennessee and its fixed income business through FTN Financial. The company also continued to unwind from the mortgage business it sold in 2008. 2013 net income available to common shareholders was $24 million, and earnings per common share were $0.10. In the fourth quarter, consolidated net income available to common shareholders was $49 million or $0.21 per share.

"In 2013 our bankers and FTN Financial team continued to build on our promise to be the best at serving our customers, one opportunity at a time. We earned the number one market share in Tennessee, grew loans in our regional bank and continued to wind down our non-strategic businesses," said Bryan Jordan, First Horizon's chairman and CEO. "As we prepare to celebrate our company's 150 th anniversary this year we're focused on building our business for generations to come, improving asset quality, controlling costs and managing our business to create long-term value for our shareholders."

Financial highlights

In the regional bank average loans grew 2 percent and average core deposits were up 2 percent from 2012 to 2013. Expenses declined 7 percent even as the bank continued to selectively invest in talent, products and technology.

The fixed income group remained an important part of First Horizon's business mix, making significant contributions to overall fee income in spite of uncertain market conditions that led to lower sales volumes.

Asset quality improved throughout the year, with net charge-offs down 58 percent and reserves down 8 percent from 2012 to 2013. The loan loss provision declined 29 percent year over year.

Capital ratios remain strong, with estimated Tier 1 capital at 14 percent at the end of 2013.

FHN CONSOLIDATED SUMMARY RESULTS

Quarterly, Unaudited

4Q13 Changes vs.

Twelve months ended

2013 vs.

(Dollars in thousands, except per share data)

4Q13

3Q13

2Q13

1Q13

4Q12

3Q13

4Q12

2013

2012

2012

Income Statement Highlights

Net interest income

$ 157,135

$ 158,838

$ 160,019

$ 161,382

$ 170,598

(1)%

(8)%

$ 637,374

$ 688,667

(7)%

Noninterest income

132,860

150,571

142,983

156,403

151,143

(12)%

(12)%

582,817

670,636

(13)%

Securities gains/(losses), net

2,183

(96)

(351)

24

(4,700)

NM

NM

1,760

693

NM

Total revenue

292,178

309,313

302,651

317,809

317,041

(6)%

(8)%

1,221,951

1,359,996

(10)%

Noninterest expense

260,097

433,556

227,408

240,540

271,361

(40)%

(4)%

1,161,601

1,383,701

(16)%

Provision for loan losses

15,000

10,000

15,000

15,000

15,000

50%

*

55,000

78,000

(29)%

Income/(loss) before income taxes

17,081

(134,243)

60,243

62,269

30,680

NM

(44)%

5,350

(101,705)

NM

Provision/(benefit) for income taxes

(36,555)

(31,094)

15,008

17,730

(12,914)

(18)%

NM

(34,911)

(85,262)

59%

Income/(loss) from continuing operations

53,636

(103,149)

45,235

44,539

43,594

NM

23%

40,261

(16,443)

NM

Income/(loss) from discontinued operations, net of tax

(6)

123

1

430

(12)

NM

50%

548

148

NM

Net income/(loss)

53,630

(103,026)

45,236

44,969

43,582

NM

23%

40,809

(16,295)

NM

Net income attributable to noncontrolling interest

2,934

2,875

2,843

2,813

2,901

2%

1%

11,465

11,464

*

Net income/(loss) attributable to controlling interest

50,696

(105,901)

42,393

42,156

40,681

NM

25%

29,344

(27,759)

NM

Preferred stock dividends

1,550

1,550

1,550

1,188

--

*

NM

5,838

--

NM

Net income/(loss) available to common shareholders

$ 49,146

$ (107,451)

$ 40,843

$ 40,968

$ 40,681

NM

21%

$ 23,506

$ (27,759)

NM

Common Stock Data

Diluted EPS from continuing operations

$ 0.21

$ (0.45)

$ 0.17

$ 0.17

$ 0.17

NM

24%

$ 0.10

$ (0.11)

NM

Diluted EPS

$ 0.21

$ (0.45)

$ 0.17

$ 0.17

$ 0.17

NM

24%

$ 0.10

$ (0.11)

NM

Diluted shares (thousands)

236,753

236,895

240,891

242,799

246,132

*

(4)%

239,794

248,349

(3)%

Period-end shares outstanding (thousands)

236,370

236,328

240,555

241,225

243,598

*

(3)%

236,370

243,598

(3)%

Cash dividends declared per share

$ 0.05

$ 0.05

$ 0.05

$ 0.05

$ 0.01

*

NM

$ 0.20

$ 0.04

NM

Balance Sheet Highlights (Period-End)

Total loans, net of unearned income (Restricted - $.1 billion)

(a)

$ 15,389,074

$ 15,408,556

$ 16,197,952

$ 15,889,670

$ 16,708,582

*

(8)%

Total deposits

16,734,956

16,283,909

17,011,884

16,204,467

16,629,709

3%

1%

Total assets (Restricted - $.1 billion)

(a) (b)

23,792,576

23,858,753

24,852,800

24,803,048

25,334,019

*

(6)%

Total liabilities (Restricted - $.1 billion)

(a) (b)

21,292,083

21,425,460

22,306,392

22,203,321

22,824,813

(1)%

(7)%

Total equity

2,500,493

2,433,293

2,546,408

2,599,727

2,509,206

3%

*

Asset Quality Highlights

Allowance for loan losses (Restricted - $4.4 million)

(a)

$ 253,809

$ 255,710

$ 261,934

$ 265,218

$ 276,963

(1)%

(8)%

Allowance / period-end loans

1.65%

1.66%

1.62%

1.67%

1.66%

Net charge-offs

$ 16,901

$ 16,224

$ 18,284

$ 26,745

$ 19,781

4%

(15)%

Net charge-offs (annualized) / average loans

0.44%

0.41%

0.46%

0.67%

0.48%

Non-performing assets (NPA)

(c)

$ 434,988

$ 482,045

$ 506,265

$ 418,385

$ 419,369

(10)%

4%

NPA %

(c) (d)

1.95%

2.19%

2.25%

1.81%

1.84%

Key Ratios & Other

Return on average assets (annualized)

(e)

0.89%

(1.69)%

0.74%

0.73%

0.69%

Return on average common equity (annualized)

(f)

9.37%

(20.39)%

7.46%

7.48%

7.20%

Net interest margin

(g) (h)

2.98%

2.97%

2.96%

2.95%

3.09%

Fee income to total revenue

(i)

45.81%

48.66%

47.19%

49.22%

46.98%

Efficiency ratio

(j)

89.69%

NM

75.05%

75.69%

84.34%

Book value per common share

(k)

$ 8.92

$ 8.64

$ 8.96

$ 9.16

$ 9.09

Tangible book value per common share

(h) (k)

$ 8.23

$ 7.95

$ 8.28

$ 8.51

$ 8.44

Adjusted tangible common equity to risk weighted assets

(h) (l)

10.31%

9.69%

9.69%

9.91%

9.93%

Market capitalization (millions)

$ 2,753.7

$ 2,597.2

$ 2,694.2

$ 2,576.3

$ 2,414.1

Full time equivalent employees

4,309

4,338

4,296

4,381

4,507

NM - Not meaningful

* Amount is less than one percent.

Certain previously reported amounts have been reclassified to agree with current presentation.

(a) Restricted balances parenthetically presented are as of December 31, 2013.

(b) Balances reflect the net presentation of certain capital markets receivables and payables. Prior periods have been revised for comparability.

(c) 2013 increase primarily relates to second liens placed on nonaccrual based on information received from a third-party on the performance status of non-FHN serviced first liens and acquired foreclosed real estate from the MNB acquisition.

(k) 2Q13 decrease due to $40 million prepaid share repurchase agreement, shares were delivered in 3Q13.

(l) Current quarter is an estimate.

Certain measures in this release are non-GAAP, meaning they are not presented in accordance with generally accepted accounting principles (GAAP) in the U.S. First Horizon's management believes such measures are relevant to understanding the capital position and results of the company. The non-GAAP items presented in this release are tangible book value per common share, adjusted tangible common equity to risk-weighted assets and net interest margin computed using net interest income adjusted for FTE. These measures are reported to First Horizon's management and board of directors through various internal reports. Additionally, disclosure of the non-GAAP capital ratios provides a meaningful base for comparability to other financial institutions as demonstrated by their use by the various banking regulators in reviewing the capital adequacy of financial institutions. Non-GAAP measures are not formally defined by GAAP or codified in the federal banking regulations, and other entities may use calculation methods that differ from those used by First Horizon. The reconciliation of non-GAAP to GAAP measures and presentation of the most comparable GAAP items can be found in this table:

Certain previously reported amounts have been reclassified to agree with current presentation.

(a) Included in total equity on the Consolidated Balnce Sheet.

(b) Includes goodwill and other intangible assets, net of amortization.

(c) Current quarter is an estimate.

(d) Defined by and calculated in conformity with bank regulations.

Conference call

Management will hold a conference call at 8:30 a.m. Central Time today to review earnings and performance trends. There will also be a live webcast accompanied by the slide presentation available in the investor relations section of www.firsthorizon.com . The call and slide presentation may involve forward-looking information, including guidance.

Participants can call toll-free starting at 8:15 a.m. by dialing 877-303-6618. The number for international participants is 224-357-2205. The conference ID number is 30344741. Participants can also listen to the live audio webcast with the accompanying slide presentation through the website. A replay will be available from noon today until 11:59 p.m. Jan. 31. To listen to the replay, dial 855-859-2056 or 404-537-3406. The passcode is 30344741. The event also will be archived and available by midnight Central Time on the website.